Editorial: Harper Tories would do well to return to budget surpluses

Many people will be pleased that federal Finance Minister Jim Flaherty continues to repeat his pledge to balance Ottawa’s books by 2015. But as much as ordinary taxpayers might cheer a return to surpluses, it’s likely no one will be happier than the Tories themselves, who could use some good news as the Senate scandal plays out interminably.

The Tories are holding their convention in Calgary after the late June floods forced them to cancel the event, and you can bet there will be plenty of discussion in the hotel hospitality suites tonight and Friday about Prime Minister Stephen Harper’s handling of the Senate controversy, and who knew what when. Flaherty’s determination to wipe the red ink off the government’s budget document is likely the Conservatives’ best hope at creating a more positive narrative.

Since coming to power in 2006, the Harper government has portrayed itself as a prudent manager of the public’s finances, although not always convincingly. The government has added nearly $170 billion to the federal debt since the start of the economic downturn in 2008. Some of that debt was necessary to stimulate the economy — and was taken on at the urging of the opposition parties — but the time to begin being more responsible with spending and borrowing has long passed.

“I can tell you that the plan is to budget a surplus in 2015, and not a tiny surplus. There will be no doubt that we’re balanced in 2015,” Flaherty told reporters after meeting with economists earlier this week.

The Finance minister is more upbeat than the parliamentary budget officer, who pegs the surplus at a relatively modest $200 million in 2015. The Tories said in their recent throne speech that they will freeze the operating budget, which is expected to crimp public service hiring and wage costs.

The government’s annual report for the year ending March 31 was released last week. It showed the deficit was $7 billion less than expected, although at just shy of $19 billion, it’s clear more progress needs to be made at erasing the shortfall. The flooding in southern Alberta and the summer rail disaster in Lac Megantic, Que., threaten to dog the federal ledgers for some time to come, but Flaherty must rectify the books as promised if the federal Tories are to be competitive in the 2015 fall election.

Significantly, the government doesn’t appear determined to balance the books on the backs of Canadian workers and their employers. The government has frozen employment insurance premiums for three years, which while costing the treasury about $660 million next year alone, leaves more change in the pockets of workers and doesn’t further discourage employers from adding to their payrolls by hiking the cost of hiring.

The Tories have demonstrated decisive action on their pledge to cut taxes, especially for ordinary Canadians. It’s estimated chopping the GST from seven per cent to five per cent costs the government at least $12 billion a year, but importantly, such measures give Canadians control over a great proportion of their income. The two-step reduction in the GST is tangible proof of the merits of the Harper agenda, one voters are reminded of every time they make a purchase at the store.

The benefit of balanced books, of course, is that the federal government needn’t borrow to maintain present-day services. The debt now stands at $613 billion, according to the Canadian Taxpayers Federation, so whittling it down to a more manageable level must be the next priority. Debt payments run up the cost of services for today’s taxpayers and leave future Canadians with liabilities that can dangerously constrain their flexibility.

The Harper government has promised to allow income splitting for parents with children under age 18 when the books are balanced, which would reduce the amount of tax many couples with lopsided incomes must pay annually. The government has also pledged to enhance fitness tax credits for children and to add a new one for adults.

All these measures are sure to prove popular with voters, but they’re contingent on Flaherty returning to surpluses. And it’s those balanced books, as the Harper Tories must realize, that are essential to encouraging voters to divert their gaze from the Senate debacle to something that casts the government in a more positive light.

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